A dying savings culture appears to have had a new lease of life in lockdown as research reveals the habit of putting money away regularly might be one of the few good things to come out of the pandemic.
According to a poll1 from Nationwide Building Society, savers have squirrelled away an average of £1,085.90 since the first lockdown. However, there remain many who continue to struggle to save much, if anything, particularly those on lower incomes.
The research, which comes as Britain’s biggest building society launches a national advertising campaign to ‘Get the Nation Saving’, shows half (50%) of Brits say that financial worries due to Covid-19 have made them think about saving now, more than they did before. More than two thirds (69%) believe the pandemic will have a long-term impact on how important they think it is to have a financial buffer in place, rising to three quarters (75%) of those aged 16-34.
Even those on lower incomes believe Covid-19 will have an enduring impact on the need for a nest egg, with 63 per cent of those earning £15,000 or less agreeing this is the case. This rises with higher earnings – from 72 per cent for those earning £15,001-£25,000 and 73 per cent for those earning £25,001-£35,000.
According to the survey, younger people are more likely to save today, with around two thirds (65%) of 16 to 34s thinking this way, compared to less than a third (32%) of those aged 55 and over. Regionally, some 67 per cent of Londoners are thinking more now about saving as a result of the pandemic, compared to just 44 per cent in the East Midlands and 42 per cent in Yorkshire and Humberside.
Savings habit has already begun:
Since the first lockdown last March, nearly four in ten (38%) Brits have been able to save more. More than a quarter (26%) of those earning £15,000 or less have been able to put more money away, compared to 43 per cent of those earning between £25,001-£35,000, and 59 per cent of those earning £55,001 or more.
However, for many, the pandemic may have further restricted their ability to save, particularly for those who have seen their incomes shrink or who have lost their jobs. For those earning £15,000 or less, 27 per cent said they saved less since last March and 17 per cent have never saved any money. However, only nine per cent of those earning between £15,001 and £25,000 said they have never saved any money at all.
|
Earnings vs Saving |
£15k or less |
£15,001-£25,000 |
£25,001-£35,000 |
£35,001-£45,000 |
£45,001-£55,000 |
£55,001 or more |
|
I’ve saved more |
26% |
38% |
43% |
43% |
49% |
59% |
|
I’ve saved less |
27% |
28% |
23% |
28% |
27% |
13% |
|
I’ve never saved any money |
17% |
9% |
5% |
3% |
4% |
3% |
|
I’ve saved more |
23% |
23% |
26% |
25% |
17% |
22% |
Looking to the future ‘sunny’ day:
The pandemic forced nearly three quarters (72%) to either postpone or cancel their plans. While more than two in five (41%) of those put the money they had set aside into their savings, 17 per cent used the spare money to pay down debt, and 15 per cent spent it on themselves – increasing to 23 per cent for those aged 16 to 34.
As thoughts turn to future post-lockdown life, taking a holiday is the single biggest plan, according to the Nationwide poll – picked by 29 per cent of people. Six per cent want to see family and friends and one in 20 (5%) are looking forward to attending a sporting event. To make those plans a reality, around a fifth (19%) say they’ll need up to £500, while more than a third (34%) say they’ll need up to £1,000 to undertake their ‘sunny’ day activity.
According to the Nationwide poll, people believe it will take around five and half months to save the money needed, although more than three quarters (77%) think it will them up to a year. One in five (20%) won’t need to save to be able to do their plans.
When the savings penny dropped:
For nearly a quarter of Brits (23%), their savings ‘lightbulb’ moment occurred during the first lockdown (March, April, May), with nearly a third (32%) of those aged 16 to 34 starting to think about saving during that period. However, not everyone has been able to save, given the financial impact of the pandemic, with a quarter (25%) of those surveyed having saved less money. Regionally, the Welsh (48%) are the most likely to have been saving more, while Greater London had the highest number of people saving less (30%).
According to the Money and Pensions Service (MaPS)2, more than 11 million people in the UK have less than £100 in savings. According to the poll, a quarter (25%) of those who have saved since the first lockdown have put away up to £100, with nearly half (48%) of those earning £15,000 or less topping up their savings by that amount.
According to the Nationwide survey, the amount Brits feel they can currently save each month is £133, with men able to save more (£153) compared to women (£113). In fact, around a quarter (24%) admit they can only save up to £50 each month, rising to 44 per cent who say they can squirrel away up to £100 a month.
Tech savings:
Technology, including apps and features on banking apps, can also be valuable in getting people into the savings habit. According to the poll, nearly three in five (58%) say they find technology helpful in getting them to save, with younger people tending to find it most useful. In fact, nearly three quarters (74%) of those aged 16 to 34 find technology helpful for the savings habit, compared to just 39 per cent of those aged 55 and over. Women (62%) are also slightly more inclined to find technology beneficial than men (55%).
Nationwide has a range of tools available on its Mobile Banking App that are designed to help people save easily including:
- Impulse Saver: This allows people to transfer pre-configured and personalised amounts from their current account to their savings accounts – with a couple of taps. Either from within the App via ‘Quick Save’ or before logging in at a tap of a button.
- Round-ups: This allows members to roundup the ‘spare change’ from debit card transactions and transfer this into a savings account.
- Savings goals: This tool allows members to tell us how much they want to save, and by when and it will then suggest how much people need to save daily, weekly or monthly. They can then easily track progress against this goal and choose an image to help personalise this feature.
Prize draws encourage savings habit:
Given the current low interest rate environment, prize draws are an alternative way to reward the savings habit and more than two in five (44%) are more inclined to save if there is an incentive to do so. This has been borne out by Nationwide’s Start to Save account, launched in February last year and which has seen more than 183,500 accounts opened.
Start to Save was launched to encourage Britain to save, especially young people who have the means to save even a small amount, but for whatever reason aren’t doing so. And, to further motivate people to save regularly, the account offers savers the chance to win £100 through regular prize draws. In the latest prize draw, last month, 1,304 savers each won a £100 prize. The account appears to be succeeding in encouraging the savings habit. For example, of the 47,318 accounts opened by the end of April, 30 per cent (14,084) have saved at least £50 each month giving them entry into all three of the Society’s Start to Save prize draws to date, while more than half (51%) of account openings continue to be made by those aged 18 to 39. This compares to 25 per cent for this age group across the Society’s other savings accounts.
Tom Riley, Nationwide’s Director of Banking & Savings, comments: “Despite the pandemic, it’s heartening to see a positive shift in our collective savings mindset. It’s clear that more people are seeing the importance of building a nest egg. Our research suggests this habit may be here to stay. We hope our campaign encourages more people to save for their own ‘sunny day’ plans.
“However, while some people have been able to put money away, there are many people across the UK for whom saving was difficult even before the pandemic struck. As a mutual and one of the UK’s largest savings providers, our focus has always been on trying to encourage people into the savings habit where they can, so it’s reassuring to see the positive impact that our Start to Save account is having on getting people to start or return to the savings habit. That is why we have recently extended the product to include two additional prize draws this year.”
